Oracle Earnings Exceed Street Targets; Shares Rise

Oracle forecast a 4 to 14 percent rise in sales of new software this quarter and hiked its dividend by a fifth, fueling hopes that a global resurgence in technology spending remains intact.

Oracle's headquarters in California.
Oracle's headquarters in California.

This quarter, Oracle forecast a rise in hardware sales of 2 to 8 percent in constant currency terms. It forecast earnings, excluding items, of 69 to 73 cents this quarter.

For the most recent quarter, Oracle reported a quarterly profit that surpassed Wall Street's forecasts by four cents a share as the company benefited from an expanding product line.

The business software giant run by Silicon Valley billionaire Larry Ellison said it earned an adjusted profit of 54 cents a share in its fiscal third quarter. That compares with earnings of 38 cents a share a year earlier.

Non-GAAP sales at Oracle jumped to $8.81 billion in the most recent quarter. Sales came in at $6.469 billion a year ago.

The company was seen turning in a profit of 50 cents a share, with sales of $8.669 billion, according to a consensus estimate compiled by Thomson Reuters.

Oracle boosted its quarterly dividend to 6 cents a share, up from 5 cents a share. The increase of 20 percent matched a recent increase by business software rival SAP.

New software license sales, which generate high-margin, long-term maintenance contracts and are a good gauge of the company's future profits, rose 29 percent to $2.2 billion. That figure was above Oracle's own forecast.

Oracle expanded into the server hardware business last year with the purchase of Sun Microsystems.

On an unadjusted basis, Oracle reported a profit of 41 cents a share and sales of $8.76 billion. Wall Street analysts make their estimates on an adjusted basis, which excludes one-time items.

Oracle shares, which jumped more than 2 percent on the Nasdaq on Thursday, traded both above and below their closing mark in volatile extended trading. Get the latest after-hour quotes for Oracle here.

Its results offered fresh evidence of the upward curve of technology spending as it battles Hewlett-Packard and International Business Machines to lead the cloud computing and data center revolution.

Executives told analysts they saw no material impact from the unfolding logistical tangles and power disruptions in Japan, which yielded 5 percent of its revenue in fiscal 2010.

Oracle's strategy of offering a one-stop shop for business software and hardware is showing signs of paying off in an improving economy.

Like IBM and Cisco Systems, Oracle and HP are aiming to provide the infrastructure for companies to move toward "cloud computing," where data is handled remotely in datacenters rather than on premises.

The looming battle between Oracle and HP is spiced up by the fact that former HP Chief Executive Mark Hurd—who left last year after a flap over inaccurate expense reports and a questionable relationship with a female contractor—now works at Oracle.

Ellison, not one typically to shy away from blasting competitors in public, was on jury duty and absent from Thursday's conference call with analysts.